Plan stems flight of graduates - Portland Press Herald

by Beth Quimby

LEWISTON - Maine-educated college students who agree to stay in Maine after they graduate would get tax credits on their college loans under a proposal being pushed by a group of Maine students.

The group, Opportunity Maine, began a petition drive on Tuesday to gather the required 50,519 signatures from registered voters by Jan. 25 to put their proposal on the November 2007 ballot.

Proponents said the measure is designed to boost the number of college graduates in the state by easing the financial pain of getting a degree. They also hope to raise Maine's average income, which lags those of other New England states, and reverse the so-called "brain drain" that results in 50 percent of the state's college graduates leaving Maine for work.

"It's not just about college but about jobs," said Andrew Bossie, student body president at the University of Southern Maine and president of Opportunity Maine.

But some tax policy experts said that it is unclear whether the measure would bring about its intended goals, and that it could create an unfair playing field for new out-of-state college graduates who want to move to Maine.

Under the measure, any Maine resident who earned an associate's or bachelor's degree at a Maine college or university and signed an agreement with the state could get a tax credit for college loan payments for each year that person lives and works in Maine.

The tax credit would also be available to the person's employer, should the employer pick up the employee's college loans. The amount would be capped at the cost of tuition and mandatory fees for a bachelor's degree in the University of Maine System. That works out to about a $2,100-a-year tax credit at present prices, Bossie said.

The average debt of students who graduate from Maine public universities is about $21,000, said Rob Brown, campaign director. Brown said the tax impact of the proposed measure is still being worked out by his group.

But, he said, an initial analysis shows the state could lose about $3.4 million in revenue because of the credits, which he said would be offset by additional income tax paid by residents who are added to the Maine's tax rolls rather than some other state's.

The measure is the brainchild of a bipartisan group of students and others who spent the past year meeting with students, educators, legislators and business people. Brown said it is unique to Maine, although other states have used similar measures to lure health care workers or other highly skilled workers to underserved areas.

Tax policy specialists gave the proposal mixed reviews. State Rep. Richard Woodbury, an independent from Yarmouth and chairman of the Legislature's Taxation Committee, said he did not know whether the loss of tax revenue from the credits would be offset by taxes generated by the retention of more Maine-educated college graduates in the state. But he called the proposal intriguing.

"It is addressing two of the really big challenges we have identified Maine needs to work on: encouraging more of our high school graduates to go on to college, and keeping our highest-skilled young people in Maine," Woodbury said.

He said he provided some advice to Opportunity Maine but is not affiliated with the group.

Rep. Harry Clough, R-Scarborough, said the issue is too complex to put before voters in a referendum. He said Opportunity Maine should have approached a member of the Taxation Committee to sponsor the bill.

"It deserves a full and fair hearing to find out the ramifications," he said. "There are a lot of people involved in it and it deserves a complete hearing."

Rep. Herbert Clark, the ranking Democrat on the Taxation Committee, gave the proposal a thumbs-up, even if it results in some lost tax revenue.

"It is a good idea, a creative idea. A tax credit would be a step in the right direction of many steps to help our kids stay here," he said.

Charles Colgan, professor of public policy and management at the University of Southern Maine's Muskie School of Public Service, said the proposal has positives and negatives.

He said a $2,100 tax credit would significantly lower the state income taxes paid by most recent college graduates in Maine. The measure could also entice more students to attend college in Maine.

But Colgan said the proposal could wind up benefiting people who were planning to stay in Maine after college graduation anyway. And he said it would do little to entice highly paid college graduates, such as those in engineering and computer science, who can fetch salaries as much as 50 percent more in some metropolitan areas outside of Maine.

Colgan also said the measure would be unfair to students who attend college outside of Maine but would like to live in Maine.

Students who spoke at Tuesday's news conference said their lives would have been transformed by the measure. Leah Malave of Greenbush said she never considered college after high school, but when she found herself at age 30 as a single mother of two sons, she went to college out of economic necessity.

She now holds associate's, bachelor's and master's degrees in criminal justice from the University of Maine System. But she said she is also $50,000 in debt and she wonders how she will ever pay off her loans.

"I have a son in high school and I won't be able to financially help him" in college, she said.